How Far Will Mass Market Lagers Fall?

Over the past decade, varieties once thought of as boutique beers, such
as I.P.A.s, have exploded in the United States, thanks to the locavore
movement. Craft brewing
is now doubling in sales, by volume, every five years; today,
craft-beer sales make up twenty-one per cent of the beer market, and
twelve per cent of the volume. The Brewers Association, a craft-brewing
trade group, expects craft beers to have a fifty-per-cent market share
in a decade. Since craft brewers use about ten times more hops than
megabrewers, the trend has been a bonanza for Hopsteiner and the other
big hops companies. [emphasis added]

Let's leave aside that unsubstantiated (and untrue) intro sentence about the locavore movement. The bolded sentence is the real whopper. It's not clear whether he's talking volume or dollars when he refers to the market--even predicting that the craft market will more than double in ten years is a pretty staggering prediction. That would require 10% year-over-year growth for the entire period. For volume to hit that mark, craft would have to grow more than four-fold in ten years time--and someone better at calculating compound growth can run those numbers. [Update. In a tweet, Brewers Association economist Bart Watson confirmed he was misquoted. "No. I think I said something like the high end could get to 50% of dollar sales eventually."]

It is interesting to consider where the floor for mass market lagers is. Rather than just guess at random, let's look at a similar product category: coffee. Much like beer, it was an industry once dominated by a single kind of product and a few large national players. Like beer, a "craft" movement arrived in the 1980s and began gobbling up market share. Like beer, consumption habits vary for younger folks than older folks. Like beer, total consumption is declining even as consumption of good coffee increases. And finally, like beer, people drinking outside the home is on the rise. And what's happening in coffee?

Only about 8 percent of the coffee beans Americans buy are fresh whole beans, which upscale coffee brewers, like Blue Bottle, will
tell you is the much better way to buy coffee beans. And ground coffee
isn't just outpacing whole bean coffee — it's increasing its lead, each
and every year.

I couldn't find solid stats on coffee, which has no equivalent to the Brewers Association. Coffee is also fragmented in a way beer isn't (espresso vs ground vs whole bean vs pod). But this one teaser graph from Statista is illuminating:

Folger's and Maxwell House are objectively inferior products. They're made with inferior beans and produce coffee I think most people would agree is marked by harsher flavor notes. This, too, is different from beer. Mass market lagers may be less interesting, but they're not made from inferior ingredients. The difference is subjective. And yet, Folger's and Maxwell House are still rocking it. Why?

But just the opposite is true: People in this country, on the whole, are actually drinking worse coffee today than they have in the past. And the reason appears to be that they value cheapness over quality — and convenience over everything.

This is certainly going to be the case with beer. There will always be a large market for cheap beer, because there will always be a large group who prize value over flavor. (Or, more accurately, a group that prizes value at least part of the time.)

My rough guess, based on business news from the past couple years, is that about 50% of the coffee sold in America is "cheap"--the equivalent of mass market lager. That seems about right. I suspect the number might tick up or down depending on trends, but the low-end market is never going away, no matter how ubiquitous Starbucks seem. At some point in the future, we'll settle on a definition for mass market beer, and it will probably include some flavors and styles we currently call "craft." (Witbier is cheap and easy to make in volume, as one emerging example demonstrates.) By the time the market matures and we have settled on that definition, most of us will think of mass market beer about as often as we think of three-pound cans of Maxwell House now.